Yield to Worst (YTW)

Yield to Worst (YTW) is the lowest possible yield an investor can receive on a bond that has multiple call or put dates, by calculating the yield for each possible redemption scenario and selecting the minimum. It represents the most conservative measure of a bond's return — ensuring the investor understands the worst-case yield outcome given all embedded options. For callable bonds, YTW is typically the lower of the Yield to Maturity and all Yield to Call figures calculated for each call date. For Indian investors evaluating structured bonds, AT1 bonds, or callable NCDs, YTW provides a crucial risk-adjusted return benchmark. Comparing the YTW of a bond to an equivalent risk-free government security yield tells the investor the minimum credit spread they can expect to earn — which may be significantly lower than the headline coupon rate if the issuer is likely to exercise its call option at the earliest opportunity.